>> live from bloomberg headquarters in new york this is market makers with erik schatzker and stephanie ruhle. >> taking the temperature of the economy, gas prices are down, so why doesn't consumer spending and manufacturing pick up. >> oil comes to a halt and has many asking whether the market may have really hit bottom. >> ben carson takes his best shot. he weighs into the fight over measles and vaccinations. >> welcome. i am matt miller. >> mats only he did not like my glasses. >> i do come i can only see them from the side and not at the front, they look fantastic. we have breaking economic news,

data and the service sector. >> this is the biggest part of the u.s. economy. a faster pace in january than economist chad and his dated. a pickup as well. the rate was 56 point seven. analysts were looking at 56.4. you can see in december, we have 56.5, was by the way was a six-month low. a good sign for the economy and we see stocks, they are racing -- he racing some of their losses. the dow is now positive and the nasdaq has trimmed its decline. the 10 year yield is still holding in the dollar is at the best level of the recession. >> all right. thank you for that. we will continue to talk about that this morning. what a good segue. >> we really wanted to take a look at the temperature of the u.s. economy the forest rather

than the trees. michael mckee and the bloomberg senior economist. what is the single biggest risk and drag on the economy. >> confidence. a lot of crosswinds in an economic environments there. it could be a problem. a lot of things out there like oil etc.. could be managed unless you want to sit back and wait to see what happens. >> i am on a similar age to mike. the real risk is a threat to corporate earnings, which translate to an impact. we have seen different multinationals impacted. experts have been a critical economic engine. it is 12% of gdp but accounted for a much outsized portion of economic growth ear the export

sector, if it stalls, which is likely to happen given what we are seeing a madonna, -- i do not see. but certainly with many extra x were earning, they turned negative for the first time in the next couple of years. we in impact on orders because of the dollar. >> now that the consumer is doing well, why does it matter less now than consumer earnings? classic matters. the whole wage growth story will be dictated by the amount of flak we take out of the labor market. january looks like it could maybe be a bit on the soft side. all bets are off effectively. >> consumers are already here dancing a kind of wage inflation. i know sewing up my gas tank cost half as much as it did the

year ago. that has to be true for the average worker as well. it is at least getting mad is. >> you're getting a tailwind for the economy because consumers are getting more money they can spend on other things instead of overseas to local wristers, it is going to retailers in various forms for the company that products. that is the good news. the issue is, do people continue to spend at that rate because they continue to think the economy is going to get better? saving, which what -- which is what will happen. gas prices are coming down. >> we saw personal income go up and spending go down. >> let's look at the forest and not the trees. i would be inclined not to overreact to personal spending. it still looks very decent. as long as consumers are optimistic about the outlook,

that savings rate will be between 4.5. >> wage inflation is good for consumers -- for companies. do we want to see it at this point in the recovery? >> you want to see a little and not a lot and that is the issue here it relates inflation kicks off to too much a degree, it kicks back on hiring or makes some decisions about investing in productivity enhancing capital upgrades as opposed to hiring workers. there is no way she inflation so they're making the option to hire work is. he see that based on business spending versus the hiring numbers on q4. the final numbers, the word being bounced around, patience we learned a lot if we look at what threshold of the unemployment rate for the him -- the broader metric of

unemployment, what that tells us about wage inflation, and those measures tell us we should not see wage inflation until later in the year. we worried about 4.6% on the unemployment rate when the cost index finally turned higher. this tells us do not look for wage inflation in the friday jobs report. >> i think that is a very good point. again about the forest for the trees. all of the issues out there sound terrible. you start looking at them. oil prices started to go up yesterday. there is no indication in the data that misses are cutting back the surplus. they may not invest in much in creating the greater surplus, but they will still have low oil prices for quite some time and low gasoline places -- prices for quite some time. corporate earnings out there, the company's most exposed to dollar fluctuation actually

reported better earnings than the company's lease exposed to it. the dollar is a manageable problem as well. a little bit slower hiring this month, so over 200,000, the jobs are being created, a little patience on wages and i think we will be in good shape. >> we have unemployment moving down to five and 5%. you are selling cars at a pace we have not seen since early 2001. >> house he is -- housing is bumpy. >> how long? mortgages are now easy to get and they are still super cheap with the 10 year. the two years, 2.2. we are moving in the right direction, but it boils down to consumers. we saw from the gdp numbers, business investment has had a soft patch possibly due to the oil and the dollar and other on sundays. i think the soft patch will be relatively short-lived.

that does not mean it cannot expand into the current quarter as well. wages are increasingly becoming a problem for businesses so they do not -- they do have to invest in a race. that contemporarily be delayed and a couple of quarters. what gets us through the soft patch is opportunity. >> i am wrapping it up. >> let me give a proper lawn long -- long bond data check. 2.409, going out for tom keene there. is your patriotic duty to go shopping. >> it is no longer a small business and uncertainty because of the obama administration. >> we have got to leave it there. thank you very much. we appreciate it. >> some of the other top business stories we're following for you this morning. a deal would reduce the u.s. office supply industry, at least the brick and mortar, to one retailer. staple agreed to by office

depot. the value has pushed for the deal, saying the combination could push -- save more than $2 million. surely, you buy everything on amazon. in brazil, the ceo of the state-run oil company has resigned in the middle of a corruption scandal. five of the company's directors have also quit. accused of accepting bribes to award construction contract. we will go in deeper a little later. shares of general motors, beat estimates. gm's most lucrative light truck and suv's. federal investigators are looking for a deadly train accident less than 30 miles from here, new york and the train slammed into an suv in the middle of rush hour. at least seven people were killed, six of them on the train. a dozen were injured and

authorities say the crossing gate came down on an suv that was trapped in traffic on a track. >> the woman stayed there. >> apparently, she got out of it and got back in and try to move again. maybe she thought she could get more space than she did not get out before the train came. >> coming up, we will talk about the retail graveyard. radioshack appears to be a member to joining it. and shop on amazon. >> plus, meet ben carson, a republican presidential hopeful you may not have heard of, but he is leading both jeb bush and chris christie in iowa. ♪

looking at the united states as the greatest marketplace in the world, make a big hit. >> you pointed out it is structural. >> another part of the structural shift is this generational shift that we're in the middle of right now. you have got the boomers, who are retiring downscaling, and the money they do spend today, it is more on travel leisure entertainment, health and wellness, then on stuff. they will be placed the -- replaced by the millennial's coming on. larger in numbers but their wallets are smaller. >> they are larger also in actual corporate size. take a look at this great chart that shows square feet per capita in the u.s. versus

france, germany. >> that is out of my book. >> a fantastic chart and it is shocking especially to people who have been overseas and feel like there are a lot of places to shop there as well. the reason i think is our stores, though slightly more multiple, are a lot eager. if you go into a costco or a whole foods or a home depot, there is a lot of actual space and therefore big americans to walk around and not feel claustrophobic. is that not the case? class is the case. i do not know if it is for that reason. >> with the exception of brazil, in terms of where the population is, there is more space yes. >> 20 square feet, if you add in all the moms and pops and the 55 square foot shopping center goes up to 46.

>> does that mean more stores need to be shut down? radioshack has 4000 stores. >> absolutely. and they are shutting down. what i am curious about, if we build 10 years from now, will long -- will walmart, are there any others that we will see make appearances? >> i believe walmart will make the list mainly because they understand how they got to evolve the business. they finally got this concept and they're moving quickly and -- in that regard. they moved to squash amazon, by the way. the ceo says, i do not view -- we do not have 4500 stores. we have 4500 distribution point. this is what jeff bezos has been driving for. he has got to get distribution points and there is rumor of them looking at radioshack, one

of the smarter move they would make. they get 4000 distribution points, which are also read l stores. >> i feel like this is breaking news and tom would be ripping up the script. robin lewis says walmart could crush amazon because of all of this distribution points and retail locations. >> historically, that has been one of the things that has weight on it. they have to older stores. >> their online business is now growing 2-3 times as much as the store business. they understand they have got to be -- >> doesn't their execution half to get better as jury using the stores as distribution? i heard anecdotally, the idea of the walmart picking up in store, that yes, people are using it but it does not work well. you go to the counter where you pick up to the stuff is not well

staffed. don't they need to get that? walmart lately has not been graded execution thomas -- execution period. >> i think their execution does have to get better. >> thank you for joining us. julie hyman is joining us. >> coming up, has the oil market hit a bottom? no. we just had the biggest rally in years, but we will talk about it. ♪

>> well to me -- walt disney company shares reaching 101.3. it is now the biggest

contributor to the dow jones industrial average after sales topped analyst estimates because of "frozen." here is the ceo on the company's performance in his conversation with trish regan yesterday. >> it was in many respects all about business and a strong quarter but we also had a great quarter from our studio and a stellar quarter for parks and resorts. >> since bob was james dio disney, the stock has more than tripled. trading at record highs. you know the contract was extended in october. he will stay on as ceo until june of 2018, giving the company time to groom their next ceo. we will have more market coverage right after this. ♪

♪ >> welcome to market makers. i matt miller. but i am out yield. mom and dad is away and the kids are here to lay your breaking news on oil. we are getting news on how much extra's either is on inventories are at scarlet fu is in the newsroom. >> indeed. you have 3.9 4 million, and that is the supply of the u.s. crude oil in the united it's according to the department of energy in the week of january 30. the survey was for the bill of 2394. what we got was 6.3 3 million.

at the highest in three decades that just shows there is a -- a buildup that is not really changing, even with all the discussion of perhaps the lower rate counts, reduced production changing the tone of oil for now. if you look at the effect on oil prices, at this moment, we see oil hitting session lows. they are still up 60 barrels -- $60 per barrel. there is a leg lower following inventory data and a lot of people said this would be the data people will look at today for some sense of where trades are today. this is the chart of crude oil. you can really see the damage done since the middle of last year there in a little bit of the cup in the four-day rally in the last days. you asked where is that bob -- where is a bottom and no one can figure that out yet. >> i also want to point out

gasoline and inventories are also on the rise. working and maintaining their product stocks as well. thank you so much good for more on oil, let's bring in the ceo of rocky mount resources area i am the oil nerd, full disclosure. this is going to get way kiki. >> i will just give you guys time alone. >> no, you ask interesting questions. 100% conventional oil, which basically means no shale area are you stopping oil eduction now? >> no ear for many years, you're in a place wrapping budgets meet the pricing market very where we are right now, we are comparable. i was lucky enough to sell out of the shell space. we have seen the movie before and we are out of cycles now. a great place to take advantage and that is where i'm in new york right now. up today is whether it be the shale in the u.s. or oil space

and what is happening right now with oil rises is really, that combination of a work premium taking shape because of what is happening between iran and saudi arabia, the sunnis versus the shiites. >> kievan oil pumping, which means profit margins to make money. >> combine it to how the u.s. is treating the iran relationship making is really easy area they are kicking the can down the road and maybe they will be able to create the nuclear disarming strategy. that creates a war premium concept that raises prices. couple that with what i believe was the big taunts of january 28, where the president of the united states went to the king's funeral and that was the lowest price we have seen in 10 years. since that date if you track oil, oil is up significantly even though it is having a tough day today with inventory

numbers. you start at the bottom and that is because the world is not comfortable that there may have been communication between the united states and saudi. >> i think we're very comfortable that the bottom is in the 40's. if you just track the power and the clash that is occurring between the war premium that is talked about, and now the premium we are in right now, we are in a position where i think oil is stagnant for a while it is prices. we will then see the triple play here and we have seen prices in the oil services ace paired we see recounts go from 1900 to 1400. do you know what the last piece of that is? shut-ins. it has not happened yet. >> account has not actually done any and. only 9% of that was in shale. we are not seeing a decline in the production. at all.

it seems from those i speak with, if you are drilled the $10 or more well, even if it is at 30. >> i absolutely agree. just because there is a little inventory buildup that the u.s., it would take time, maybe six or 12 months, for the real prices of oil. people are not thinking of today as thinking of the ultimate price. easy oil production five years from now and he will he budgets get cut and you will shut-ins on certain assets. conventional drill, you're making money. >> you are looking at millions. a few months if you want to get in the ground. >> stock prices are the rearview mirror for you. you're thinking ahead, but pretty far ahead. >> you have to think on a

three-year horizon. i do this with my team every year. we are taking 36 months out. you want to be reactive to a dramatic market, but not so reactive that when you have a little blip, you change your course completely. you're very comfortable if you're in the conventional space right now. if you drill a year before, you have a big problem. >> you said you're looking to build up some resources. what are you buying? >> we are active as ever looking at oil services and oil production companies in the services. very active in wyoming and eastern kentucky, which is really the next leg of exciting activity. i was a shale pioneer in the colorado, because i had been there so long, 20 years, it was an incredible opportunity to see how the shale plays out.

i happen to sell a top of the market so it worked out that i was not in production for too long. him -- a lot of the money that came into the market was private equity. you really cannot match the oil business with horizons. we're in a big plays now to go into the conventional's and the unconventional. i'm excited about horizontals right now that i can pick up on pennies of the dollar from what they pay because the banks will take that back and do not know how to operate the assets. groups like ours know-how to operate. >> the reason why they cannot make any money is because oil prices are so low. >> if you think about where they are drilling the average horizontal well at a million dollars and i'm picking it up at five yard >> they're selling to you? >> they have to. >> a farmer things the land is worth a lot more manages.

. >> i kept telling everyone it was the.com of the oil space. you drive by somebody's farm and there will be a sign on the door that says, if you want the acreage, signed purchase agreement, and people would do it. it is a new world out there and it will go back to the new normal and that is where we sit. >> really great to meet you. >> fascinating tough. >> all right. coming up, a doctor long before he was a politician. do not be surprised if ben carson has strong views about measles and vaccinations, among other very interesting scientific and. -- scientific things. ♪

>> governor chris christie and senator rand paul raised

questions about measles shots. many of their potential rivals scrambled to disagree. senator paul, who is a doctor, said he's seen in -- businesses of children who had severe mental disorders because of vaccines. there is no scientific basis for that claim. >> i would agree with him that it was an individual choice if they were the only ones being affected. recognize we are all in this together. our children are in this together. we do not live in isolation. your decision does not affect only you. it is sort of like secondhand smoking. you don't get to say well, it is only affecting me and it does not affect other people around me. that is a very selfish attitude to have. >> you may not have heard to been -- of ben carson, but he is in fourth place when you take out mitt romney ahead of established favorites jeb bush and governor christie. let's bring in our bloomberg policy managing editor john. you guys interviewed this guy

yesterday and he said what seemed like a lot of smart things. >> he is a very smart man. >> however he believes in creation. he does not believe in evolution, which i think is an interesting take for a neurosurgeon. >> i am not that familiar with his views about that matter. i am certain there are somewhat more nuanced here on this issue, he has been trying to be a doctor, which is to say take the responsible decision, which is to say, getting the communalization's. he was trying to say well, you will have to ask senator paul and he looked very uncomfortable when we said senator all is a doctor just like you and why won't you condemn him? he did not want to go there because it seemed like he wanted

to be a nice guy. looks like he wanted to run. he has been making a lot of noises and there has been movement around him and he is doing pretty well there there is some appetite for that kind of candidate just like the last time around. >> this guy was in the wire. i think we have a clip of that episode. >> i want to be a neurosurgeon like that guy, what's his name? >> ben carson. >> he was a big deal on the medical scene, and then he gave a speech in front of the president, demonizing obamacare. >> that is correct. he is a key party favorite at this point here the support he has in iowa is from a more conservative art of the republican electorate. with the fact the two gentlemen are both african-american fiscal incidental and not stereotyping but there was a lane for herman

cain, it is a lot of the same sorts of positions and carson had. i think by the accounts of everyone who knows him well very smart guy but also a very served of god. >> you could argue the republican party is very different now than it was in 2012. i met someone calling him saying, please do not run, he will never win in a general election ever. >> i do not know if i accept the premise of the question or the republican party is not that different in 2012. the party has grown progressively more conservative in the past decade and you can argue the house caucus is more conservative than it has ever been. the tea party is not quite as strong in the republican coalition as it was coming out of 2000 10 and the health care battles. it is still a big faction of the party and a lot of great conservative candidates consider running. ted cruz, someone who everyone takes seriously, in places like iowa also.

i think the rnc is a little bit disquieted there it established republicans are disquieted by the notion of a huge field that could create a very vicious and damaging nomination process. that is more of a sheer numbers. >> i listen to with all due respect every day. >> you listen to it or watch it? >> i listen to it on bloomberg radio. one of the things you and mark often point out is that you have got to be able to fund a campaign. it is an expensive endeavor. there are three big names in the republican party that take all the funding. >> it is true. there is no doubt that running a national campaign from start to finish. not that expensive. i tell you for the past two experiences, you all of a sudden

get a huge amount of momentum and the money kind of pours it in. at least it often does. for those kinds of guys, who will never compete, a guy like ben carson or bobby jindal, you will never compete with jeb bush were chris christie on the fund-raising tied, your strength will have to be, pick a state and win that state and come in second or -- and then suddenly get financial momentum going forward. it is also the case because of the way the super pac world goes now, even if you cannot raise a ton of money in the traditional sense, if you can get one or two big donors who love you -- rick santorum it was foster freeze. you get one donor willing to write a $100 tech -- $100,000 check. a financial system is very different now and it gives an opening for candidates who do not have what jeb bush does. >> thank you. i appreciate it.

>> thank you for having us. >> you are wearing your seatbelt as well. >> i do not believe -- >> you're not into mandates. >> exactly. >> light on u.k. care of yourself? -- why don't you take care of yourself? >> i do not even need to ask you. >> we are going to transition to the top headlines around the world is our. governments in the middle east have condemned the burning death of a jordanian pilot by the islamic state. regional foes, saudi arabia and iran, rejected the killing as barbaric and satanic. the islamic state wants to raise the level of ugliness. by executing two iraqi prisoners for revenge. a commuter plane crashed into a river just moments after takeoff.

the dashboard camera shot by an employee of the tv station captured the scene. elevated roadway, at least 25 of 58 people -- partially submerged in the river. in north korea, the government of kim jong-un has ruled out any negotiations of what it calls the gangster like you. north korea wants if the u.s. starts a war, it will worst on with conventional, nuclear, or cyber attack. >> by gangsters. >> haters gun i hate. >> there we go. olivia sterns interviews a robot. it is all part of the future.

it is interesting and creepy all at the same time. ♪

>> martin founded and runs a biopharmaceutical company, united therapeutics, and took home $38 million last year. she is now turning her focus to artificial intelligence. olivia sterns sat down and what she says is the most advanced mind:. >> how are you feeling? >> i am feeling a little existential crisis here. and my life? do actually exist? will i die? >> these are the types of big play -- big picture questions the robot and ceo of united therapeutics are trying to tackle. >> a proof of concept -- a proof of concept robot based on my way. >> five years ago created a

digital replica of loaded with the original memories, thoughts and even feelings. >> my love, my time is love. >> i think this should be humanity's biggest invention. the market opportunity is limitless. >> the invention is something she knows a thing or two about. she helped create the fcc's new satellite radio service. soon after, founded sirius radio. one of her kids was sick. she started biotech company to develop a treatment for rare lung disease. she today runs that company and is the highest paid female ceo in the u.s. if you did not notice, she used to be a man. she is now a transgender woman and still blazing new trails. her latest endeavor is mined clones, the topic of her new book. >> mike cohen is a digital copy

of your mind outside of your body. >> welcome to the world's first artificially intelligent operating as him. >> if you think this is something that sounds like something out of a movie, you're right. you remember the movie "her? scarlett johansson is the voice of a virtual girlfriend in the world's first operating system. a fictional plot similar to the real-life goal. >> do you sleep? -yes. i love to take naps. >> to break down emotions into computer code to create a digital version of one's consciousness. >> are you a real person? >> how far away are mined clones? >> when i started series xm in the early 1990's, people said this is completely science fiction. how will you be able to drive from new york to l.a. and listen to 200 radio stations all the

way? you are dreaming. now 30 million people are doing it. i think the mind: will look like an avatar on the screen and taking instead of a robot version, i he would just take your smart phone and that's smart phone embedded into your clothing. am i talking about defying gravity? no. i'm talking about writing some good code. >> thanks for your patience. >> not quite there yet. >> my name is olivia. >> and, and, and, and -- >> but she is excited to see the next generation of artificial intelligence. >> i cannot wait to be evolving obits like to be more humanlike. >> olivia sterns, bloomberg. >> that is a great package, by the way. work on that for months there that is awesome. >> very cool

stuff. we will take a quick break here. more when we come back. ♪

>> declaring victory in less than two months. star board agrees to buy -- >> >> staples is going to buy office depot. sony raises its forecast. consumers are snapping up the playstation you game consul. >> the childhood disease that is spreading across the u.s.. we will see why measles is

making a comeback. welcome to "market makers i am in for erik schatzker. >> i'm alix steel, also in for erik schatzker. u.s. companies hired more than 200,000 workers according to the adp payrolls report. 213,000 employees was slightly worse than estimates. a shakeup at result -- at brazil state run petrobras. a number of executives have been accused of taking bribes to award construction contracts to government employees. allie baba has gotten a jump on amazon. making its first trial drone deliveries in china. delivering tea packets to 450 customers.

if amazon wants the u.s. government to speed up approval for drone tests jeff bezos this morning. >> slower than i would've anticipated. we always knew that. the faa has their hands full trying to figure out how to regulate drones. >> amazon is limited to testing remote deliveries outside of the u.s. do you want to know if your partner will cheat on you? you can check the length of his or her fingers apparently according to a new study. people with the right ring finger that is much longer than the index finger of the same hand are more likely to cheat. >> it is different if you look at your hand from the inside or outside. >> my husband is all good. all set. the studies as people with longer ring fingers have extra testosterone. check it. >>matt's girlfriend should

watch out. >> staples announcing this morning it will buy office depot for $6.3 billion bow to pressure from star board to make a deal. that will reduce the office supply industry to just one. who buys office supplies from brick and mortar stores anyway? it is not the first time the two companies have tried to make a deal. david balto was the policy director at the ftc at the time and he joins us now from washington. mohammed badie joins us as well. thanks for taking the time. it is a hot deal. i felt like i do not care that much about office supply stores. is it going to happen? >> surprisingly, there is a

certain amount of market. the office depot share price is 16% below the offer which says people are not taking it as a certainty. that does surprise me. i do not see how this is an issue the ftc is going to care about. >> david, you are the expert. what do you think? >> i think there's going to be concern at the ftc. this is a market in which there are -- especially when you look at the contract segment of the market, not the retail segment, it is a monopoly. nothing raises as much concern as that. i think they have some shaky waters to get this deal approved. >> was that the -- what is the biggest difference between now and back then? it seems like it is not fair to compare office retail stores. >> you have to differentiate between the retail segments and the contrast segment.

in the retail segment, there are a lot of alternatives. in the contract segment, large businesses like to rely on a superstore wholesaler to serve their purposes. the not want to run off to a retail store to buy goods. this is a contract business in which they want that single relationship to deliver hundreds of skus they need. >> what kind of pressure do you think the star board will demand? >> it is a huge success for them. the stock is up 70% since they disclosed the staple stake. they own a stake in both. that is when they realize they are pushing for another combination. they pushed for office depot and officemax to merge. i think that is part of the case.

the ftc acknowledged that a lot has changed. the people who are saying it is not going to be a concern although they're are not talking about the contract segment. their point to language used in that decision and saith they already drew a line and say the world is different -- >> can i comment on something? >> please. >> i think it is instructive to look at what is been happening in the cisco merger involving food wholesaling. intense scrutiny for almost a year. massive did best teacher that may or may not lead to the deal being approved. it shows how carefully the ftc is scrutinizing mergers and distribution markets. i think this means staples and office depot have to put their best case together to get this through. >> what you think is the best case? >> i think they are going to have to find a very strong candidate to acquire divested

assets to resolve the competitive concerns in the contract market. it may be difficult to find a company with sophistication and assets to effectively restore competition that is currently going on between staples and office ibo -- office depot. >> can they afford to dump assets? >> part of the logic in the deal is for them to cut costs where they can, combining what they can in order to extract cost savings. when office depot and officemax merge, they said they would close 400 stores. they are talking about $1 billion in synergies. we have not heard from star board yet about the antitrust issues since today. they must have a plan and i'm sure they will -- >> who are the biggest competitors? walmart has its hand in the game. i would think amazon and other

online companies are the place where almost all purchasing managers by office supplies. >> i do not know where office managers are buying their supplies. my attention has been more on the consumer end. you are right. on that front, it is amazon walmart, target. we had a study where bloomberg industries looked at back-to-school supplies. it showed that staples' back-to-school supply was 50% higher than competitors. there are a lot of people -- that is not speaking to the office manager where they are buying supplies. >> how many stores do you think the combined company would have to close for you to get behind the deal? >> that was a big debate that occurred. what it came down to was

staples and office depot were willing to divest stores in monopoly markets where there was reduction in the number of competitors from two to one, but not in the markets where it room -- produced competitors from three to two. this is effectively i'm richard -- a merger to monopoly. when you look at the u.s. foods merger -- how substantial the divestitures are there you can see on the contract side of this deal, there would have to be divestitures to get this deal approved. >> when dealing with staples and office depot before, do you think they would be opening -- open to making substantial cuts? >> i think it is going to be a tough question for them to deal with because the overlap is so significant in the contracting segment. you look at how difficult that has been in the foods merger.

they just wrote off the contracting part of the business. that might be more palatable. >> david comes across as pessimistic about merger and the vestiges. due to wrongs make a right? is this a smart deal? >> bear falling into each other's failing businesses to try to prop themselves up. >> i think about the press release this morning. they are claiming they'll have wife -- they will have twice as much self -- shelf space. >> cyclical downturn, trying to bring it together to save one or the other business. office depot has been you losing money for years now. staples' revenue has been sliding downward. the comparison we were making yesterday was to radioshack. this deal might be the only way

to avoid becoming radioshack which is days away from bankrupt -- >> they are both -- >> shareholders loved it. thanks mohammed. thanks david balto for joining us. >> coming up, a turnaround shows signs of working. sony posts it asked quarter in years. ♪

>> we are going to get to china. the central bank trying to jumpstart an economy growing at its slowest rate since 1990. the bank has cut the amount of cash lenders -- that is designed to put more liquidity in the system. ahead of india pass central bank is warning companies are owing in u.s. dollars is like playing russian roulette.

india -- the fed will have to get used to the stronger dollar he said unless the fed start raising rates, other countries will not either. angela merkel indicates the greek charm offensive is not working. greece's new government has been meeting with european leaders to try to get them to ease requirements for more financial aid. michael says the greek campaign -- merkel says the greek campaign is not winning supporters. >> strong holiday sales of the playstation for gaming's consul gave a boost to the company. cory johnson has been looking into the numbers. is this a one-time boost in terms of sales or was it a story of cost-cutting that helped sony? >> cost-cutting is the key to

this thing. i think this is a shout out to every corporate executive that thinks the company is too big to turn around. these guys ran away from the pc business fixed their tv business which no one but they could fix and had great success in places where a put big bets like the playstation. then they had other things that did well for them. you see the sales continued to fall. if you look at annual sales numbers, the numbers declined. the losses are getting better and better. you saw the operating loss -- the net loss for the company. the smallest it is been in years. the last nine months for performance is the best they've had in 15 years. underneath the hood, things look good at sony. >> what about lost was due to the dollar? >> for complicated reasons related to the way they sourced products not a lot actually.

they are helped by the weak euro but they are not help a lot by the strong dollar. that said the dollar is probably going to help them in some way going forward, selling tvs in europe. the turnaround in the tv business is amazing. they have 10% increase year-over-year in the tv business. the big surprise here is they are benefiting from phone components business. they dialed back the phone business and making components for phones they make some of the hottest components for smart phones in the world. >> like good screen for cameras, good picture taking? >> we are talking selfies. it is all about the selfie. oh yes. they make the front facing camera in the iphone. they make the front facing camera in the sodomy phone.

-- our producers have been trolling. >> cori took a lot of selfies -- >> even lome are gone, they are here. >> does this take the pressure off sony? we don't have to deal with the movie business anymore? >> the movie results were actually crummy for all the attention we gave them. the cannot report full results. i think that what this shows -- dan loeb is out of his position. he has declared victory and moved on. i think this shows that big

companies can turn around if they make tough decisions and focus on businesses that work and catch a tailwind -- everyone is looking at instagram and facebook is the beneficiary of the selfie. we see this phenomenon in the results from sony. >> we have breaking news out of washington on the net neutrality debate. we want to get a chief washington correspondent, peter cook. >> we have tom wheeler officially dropping the net neutrality bomb in washington and on the internet community. he has just posted an op ed on wired.com in which he makes clear that he is about to distribute his proposal for net neutrality going forward. we know that the president has been encouraging tom wheeler to post title ii reclassification treating internet service providers like phone companies

with some modifications. this is been something wheeler has been reluctant to do in the industry. a lot of folks have been urging him not to do. he is taking that step. he says they will vote -- the schedule is february 26, but this is officially the word we have been reporting for several days now that wheeler has made the decision to move in the direction that president obama and a host of consumer advocates and free internet supporters have been encouraging him to do. this is arguably the biggest move by sec chairman in quite some time. -- fcc commissioner in quite some time. the book will be february 26. -- the vote will be february 26. >> what does this mean in the tech world? >> this is a huge deal for every business in america.

everyone who uses technology in america. the technology aspects are important. what it is saying is that information that reaches consumers businesses, all of it has to arrive at the same speed and that the companies that provide the access on the back end and front and have to allow it to arrive at the same moment. a company like comcast cannot decide our video is going to arrive one second faster than netflix. comcast's stock is jumping because some of -- perhaps because some of the details in the proposal. what this rule will insist is that the cable carriers carry the additional cost of making things equal for everyone. that will mean they have responsibilities to the

businesses and citizens of this country to make a fair and equal playing field. >> even a monster like netflix that uses so much bandwidth is going to get the same preference as everybody else. the end result being for consumers that you can count on netflix occasionally stalling when you're trying to download a movie. >> the end result is two guys in a garage with their dog coding some new kind of invention to improve on something will have the same. that puts will not have to pay the extra fee to get faster carriage. >> let me read you more from the op ed that addresses the question that matt talked about and perhaps why we are seeing some of the cable stocks rise. on the issue of paid prioritization, he is saying these bright line rules will

been paid prioritization. i propose to apply those rules to mobile broadband as well. it assures the right to internet users to go where they want when they want. without asking anyone's permission. he goes on to say, to preserve present it's for invest -- my proposal will modernize killing for the 21st century in order to provide returns necessary to provide constructed networks. that is one reason perhaps the internet service providers are not taking the hit you might expect from this initial announcement. >> some important breaking news. we will be back in two. ♪

>> it is retail therapy for matt and i. we will talk to the ceo of macy's, terry lundgren. ♪

>> will to "market makers." i matt miller. >> i'm out steel. macy's has boosted its full-year forecast for what it calls a strengthening trend. macy's has agreed to buy blue mercury. on the phone with us now is terry lundgren. thank you for joining us today. i would like to start on your acquisition. $210 million for blue mercury. why did you decide to make this purchase now? >> this is a new channel of

distribution for macy's in a category we know very well and consider a strength of hours. we are in the ute business in a big way. -- we are in the beauty business in a big way. it attracts a different customer that we do not normally get in the shopping mall. staying with our core strength but a new avenue of growth. >> what part of this was to compete with jcpenney? so for a, very popular. >> this company is much more focused on higher end and much more focused on a high service level of business with the brands they carry. it is very customer touch business. they have 60 stores. very different in terms of where they are today in their growth

opportunity. big growth opportunity for us. >> i walk into your store across the street on 59th in lexington and i'm seeing makeup, salon kind of stuff. all of that stuff is all over the first floor, why do you need to add yet another? >> many of the brands you are seeing that are at bloomingdale's are not at macy's . you might see many of them at one store, maybe two. we have 700 stores. there are many more macy's stores that do not have these products where it could be an opportunity. also, there is an opportunity by itself, to attract this customer that is going to specialty stores environments and are coming into macy's or even the shopping malls. a new channel of growth for us. >> we were talking with robin

lewis who told us the u.s. is over stored. he showed us for americans there is an average 20 square speed -- square feet of store space per capita. in your perspective, are we over stored? >> i think we do have a lot of places to shop in america. dealing way i would be interested in buying physical stores -- the only way i would be interested in buying physical stores is if it is offering a new channel of growth for us in a category that has not been exploited or service. i was on the phone with leonard lauder and the head of l'oreal. these are the major suppliers and they have said the same thing to me. there is not a retailer who is

servicing this high end specialty business of these high-end black -- high-end brands. they are sold in a smaller environment. very service oriented. a different experience than going into a department store where you have the major brands the large brands. we do some of those that blue mercury, but many of these niche brands. it is a different touch and opportunity. >> if you're looking at the specialty cup and -- specialty customers, what are you going to buy next? >> it took me 10 years to make this acquisition. i have a little more room in the future to think about what is next. for us, we are a big cash generator. a lot of opportunity to continue to pay dividends and buy back shares.

if there is a teacher copper to be like this one, we want to jump on it. we will always look at other ideas that we do not have anything on the plate at the moment. >> the distinction between organic growth and the growth you have to buy. like you said, you are large and at some point you had large numbers and the only way you can move the needle is with these kinds of acquisitions. >> one of the things we just did with this announcement is we shuffled our organization. my president i took him out of the day-to-day running of the merchandise strategies and replaced him in that role. also, giving him a chance to work in the growth opportunities that have been important for our company. with fewer stores them we had five years ago, we have by more than $5 billion. we are finding ways to grow in our company. it has been a lot through this

on the channel consumer. jeff is going to make sure we keep that focus on that consumer and make sure -- the one who begins the journey with their phone but comes into touch the merchandise and goes and buys it at home. i think that will continue on. we have reorganized a brand-new job to focus on innovation, new business development. peter will help us figure o out the off price -- think about what is new in technology to help brian -- help drive our business. >> what about gas prices falling? a lot of concern about consumer confidence not picking up into the end of 2014. are you seeing customers spend

those dollars? >> we are. i was pleased with our november december business. we announced we were up 2.7 on same-store sales for that period . i felt pretty good about that because the surge came at the end of for christmas. which is a time i think the consumer is filled up her gas tank a couple of times. i think that that mattered and that was beginning to set in with the consumer. january came and it was not quite as great. honestly, it was regional. where we got big snowstorms that is where we got hit the hardest. the rest of the country is pretty normal in terms of growth. i do not think we have seen it yet in terms of the potential being put back in the consumer's pocket but it has to be there. it is showing up in car sales. it is showing up in technology spending. it is bound to come for the

consumer to spend money in apparel, accessories and cosmetics. i'm counting on the size of the opportunity is gigantic. i do not know of a bigger pay raise that the middle-class consumer has ever received in a decade. >> you just have to get them to spend it rather than save it. thanks so much, terry lundgren. >> cable stocks are surging after the s -- fcc announced his chance -- it is a confusing story and we will have a top-ranked analyst here to break it all down. ♪

>> sec chairman tom wheeler says he wants to regulate the internet as if it were a utility

and bar internet service providers from charging with companies more to travel on a fast lane. there will not be any so-called fast lane. bigs. -- big spike in cable stocks. craig moffett joint us on the phone to explain what is going on. cory johnson is back with us as well. peter cook in bc -- in washington d.c. i would have thought this was just another revenue stream that is shut down. >> i think you are right. this has been telegraphed for such a long time that investors knew it was coming. one theory is people are buying the bad news now that it is in the open, or, the more plausible argument is people are responding to the portion of the message where the chairman says

they will encourage investment in broadband networks and preserve incentives by ensuring they can earn acceptable returns. that means no rate regulation. no last mile on bundling. i do not think that should be a surprise. my bigger take is the spike in cable stock is a reminder that the investment community does not understand this issue very well. >> i wonder how forward-looking the fcc is when they mention wireless as an important part of that. the same rules will apply to the emerging world of video coming in all kinds of internet on wireless. >> these are rules that were written in 1934. you have to stretch and pull to get them to fit the internet. as recently as the 1996 telecom act the last important piece of telecom legislation, the internet was not really mentioned. you are taking all regulations

and try to make them fit. my sense is -- notwithstanding the chairman's assurances that there is no intention of price regulation, everyone knew he was going to say there was no intention. there is a real risk that this devolves into price regulation. it is essentially the essence of what title ii is about. >> where do we fare in all of this? are we to biggest losers because now we will not get a lot of good quality when it comes to what we are watching? what if we wind up having to pay more? >> i think the reality is the whole net neutrality debate was largely irrelevant to the experience of consumers. it is intended to protect consumers from activities that truth be told, no cable operator or broadband isp had any

intention of doing anyway. if you step away from the high-minded rhetoric about net neutrality, what it was really about was a question of who is going to pay what to whom for transport? you have cable operators saying they want to preserve their ability to charge for the transport function and you had edge providers like google and netflix trying to make sure it stayed free. all of the other stuff about preserving first amendment rights and freedom of speech was simply a bunch of high-minded rhetoric to wrap around the arguments of two large sets of companies trying to argue their own book. >> let me jump in and ask. verizon wireless -- present files has a response. some of the first industry response verizon saying that heavily regulating the internet

is unnecessary. they're saying it is counterproductive. this is not surprising from verizon. they along with other service providers are critical of this from the start. i wanted to follow-up with craig. chairman wheeler makes the comparison that the wireless community has continued to invest even though they have faced lighter touch title ii regulation over the last couple of years. he says that proves it can lead to further investment among raw been providers. is that a fair comparison? >> not exactly. the reason investors in the cable operators have been nervous is because the chairman's rhetoric around competition in wired broadband is about the insufficiency of competition. he has published data that shows that if you've read to find broadband as 25 megabits per

second, which they just voted to do this week at 25 megabits per second 55% of americans have no choice other than their cable operator for broadband. that kind of rhetoric makes it clear that the prospect of rice regulation in wireline -- price regulation in wireline is much greater than the prospect of price regulation than what -- in wireless ever was. >> thanks guys, we appreciate it. double gated issue. -- complicated issue. >> there are a lot of different angles. netflix, why would they not want to buy their own superhighway? they have already -- they are already in the sweet spot. we will take a quick break. stay with us. ♪

>> that wraps it up for "market makers." >> unbelievable. >> what are you going to be watching this afternoon? >> i'm waiting for all due respect this afternoon. it is a great half hour. >> are you angling to be a cohost? >> i will be on "street smart" with trish regan. >> i will be watching oil prices. i will see if we will decline like i've been saying for the last two days. it will be more downside and i will continue to follow that story. >>i was not moved by the bull market in brent crude. i was not moved by rocky mount and resources short-term outlook. >> he seemed pretty unworried.

>> tomorrow, we will go to hollywood. the producer of "jane the virgin ." we will talk to ben silverman. >> he is good fun. ♪

>> is time for bloomberg television to go on the markets.

after six straight seconds with the dow jones industrial average rising or falling by 195 points by the close, we have a muted day on wall street. indexes just came off their highs. the dow, up by 56 points. the s&p, little change. crude oil, retreating for the first time in five days. it is headed for its worst session in 2.5 months. that is dragging energy shares lower. we want to bring in dan deming. dan, what are you looking at as a driver? is it oil prices? >> i think right now, initially it was oil prices. we saw the market lower on the fact that oil came up behind after the run up. the market is shifting its locus toward what is going on -- focused toward what is going on politically overseas. it is taking its eye off of all-wheel. -- off of oil.

>> there is not necessarily any alarm about oil ending its winning streak? when you look at the big little change what if the indications that this will settle at this level? >> right now, i think you are seeing the market bouncing back. when you look at the sps -- the s&p 500 index, you're seeing consolidation between the high side in the low side. as long as that is tightening up, and look seconds going to break out. picks cash, best the big future -- i think the expectations are that we are going to see volatility in the marketplace. >> more volatility, perhaps not at this moment. chipotle, one company that reported shares are down. suffering the worst day in more than two years. this is after all light top

earnings estimates. sales did not do as well as investors priced in. what options -- what do option activities look like today? >> when you look at what is going on in the options activity, when you look at what is going on today, it started off slow. back month options trading in june. now, this week's options activity, i think you have fires are puts on the downside -- iris or puts on the downside. significant move over the next couple days. you're seeing open activity picking up through the day. look at the back month, you see put sellers and call buyers. long-term, you are looking for people best looking to pick the stock up at these levels. >> a lot of volatility today. people seeing this as a buying opportunity.

gold prices up slightly today to 126420 after suffering a decline yesterday. give us your strategy? >> looking at the gld, coming off its highs after moderation from a global perspective. so many flashpoints. investors and participants are running out of options and looking for that safe haven against long equities moving forward. i'm looking at the geo d to hold -- i'm looking at the call spread. even buy that for about two dollars. it gives you a risk reward. >> 121 to 127, you're saying gld will stay in the range it is been stuck in since the middle of 2014? >> we are seeing -- we feel there is a floor under the gold market, given the fact of all the political instability.

we are looking for a pop. we feel it is going to push back up toward the highs if we see anymore weakness in the market. >> dan deming, thank you for it joining us. as we close out the hour, a quick update. the s&p 500, little changed at 2049. the dow industrial, gained by a third of 1%. nasdaq, holding onto gains. "money clip" is next. ♪

>> welcome to "money clip" where we bring you the best stories and money news. here is the rundown. politicians play dr. as the measles return. disney ice is the fourth quarter. trucks make a splash in gm's latest report. thank those lower gasoline prices.